COVID-19 pandemic exposes neoliberal myths

March 24, 2020: The debate is already raging about the deeper lessons from the COVID-19 pandemic.

Richard Denniss in The Saturday Paper (March 21, 2020) argues powerfully that the idea that the “small state” and deregulation makes for a “richer country” is totally demolished. He condemns the arbitrary consensus between the Coalition and Labor that the federal public sector should never be greater than 23.9 per cent of Gross Domestic Product. And he celebrates that the Morrison government has had to abandon its budget surplus fetish and start to expand expenditure. He calls for a much larger public sector in health and in the transition to a carbon-neutral economy.

Because the COVID-19 pandemic is triggering a global recession and possibly a depression it will change public consciousness. All sides of politics are challenged to modify both their ideological messaging and the economic, social and environmental programs they propose.

The pandemic also challenges the neoliberal approach to the world trading system. This has been shaped by the early 1990s “Washington Consensus” for rules that meet the needs of global corporations but ignore the needs of workers, communities and the environment. These rules include low or zero tariffs, no local industry policies to support diverse economies, deregulation of the labour market, privatisation of public services and other rules like longer medicine monopolies and corporate rights to sue governments (ISDS).

The debate is only just beginning about the failure of global supply chains based on narrow specialisation that prevents local industry policies for a more diverse economy equipped to address a global pandemic.

Using national emergency powers, governments have begun to order corporations to convert production to health equipment like sanitiser, facemasks and ventilators urgently required to cope with the COVID-19 pandemic.

AFTINET and other social movements have fought against resistance from pharmaceutical and other corporate interests to ensure that health emergencies allow governments to suspend parts of trade agreements. Governments may need to use these exceptions to suspend medicine monopolies and equipment patent rules in trade agreements to allow urgent access to affordable treatments for the virus.

International air travel is regulated by specific treaties, outside the agreements set up by the World Trade Organisation and bilateral and regional trade agreements. So the abrupt closure of airports to international flights is not a direct break with neo-liberal trade policy, but will contribute to the overall reassessment of the idea of deregulation of international transport markets that then fail in times of crisis. Italy has announced the re-nationalisation of its national airline to prevent its collapse and other governments may do so after 30 years of privatisation.

The COVID-19 pandemic has already required the state to regulate in the public interest. The emerging economic crash will sharpen this reversal in the short term. But there is nothing inevitable about a long-term shift back toward more democratic control of our future, as the aftermath of the Global Financial Crisis of 2008-09 demonstrated.

AFTINET and other social movements have criticised both the neoliberal corporate-dominated global trade system and Trump’s America First policies based on high tariffs, narrow nationalism and racism. This crisis requires us to advocate more than ever for trade arrangements that contribute to full employment and higher living standards in a more diverse and environmentally sustainable economy with access to essential services for all. Trade deals should not prevent governments from regulating in the public interest, and should not give more legal rights to global corporations that already have enormous market power. They should instead be based on internationally agreed and enforceable human rights, labour rights and environmental standards.

For a further critical look at the COVID-19 pandemic and international trade see a recent article by Anis Chowdhury: Coronavirus exposes global economic vulnerability

https://thefinancialexpress.com.bd/views/coronavirus-exposes-global-economic-vulnerability-1583508126

and a Progress in Political Economy post by Emeritus Professor Frank Stilwell

http://ppesydney.net/beyond-the-global-coronavirus-crisis-austerity-or-recovery/